>> from bloomberg world headquarters in new york, i am mark crumpton. this is "bottom line." the intersection of this mess and economics with a main street perspective. tonight, that the reserve issues its latest report on the state of the u.s. economy. then the fcc considers a plan to let air travelers use their cell phones in flight. the inter-sector is being called the fastest cop car ever. to our viewers here in the united states and those of you joining us from around the world, welcome. we have full coverage of the stocks and the stories making headlines tonight. yang yang is in washington with

today's cover story. she will have the latest on u.s. government rules that could change the way we fly. we will have that story coming up. economic conditions around the nation shows the united states still growing at a moderate to modest pace. is that enough to get the fed to alter its row graham. >> the new beige book does not contain any major revelations on the u.s. economy but it could bolster the view that the economy is gaining traction and could affect policymakers decisions on whether or not to scale back their asset purchases. from the fed's 12 districts, early october to mid november, that includes the 16-day government shutdown. economic activity continued to

expand at a modest to moderate pace. manufacturing activity continues to expand in most districts. reports on retail spending were deeper into the beige book, seven out of 12 strips reported modest growth. tourism is affected in some districts. on manufacturing, the report says it continues to expanded most districts with gains noted in motor vehicle and technology industries. many expressed optimism about near-term growth prospects. there is also an upbeat assessment of consumer spending. looking forward to the holiday season, retailers reported being hopeful and cautious. they were reported as moderate to strong. on the key question, what is going on in the labor market? the beige book reports hiring

showed a modest increase. difficulty with qualified workers for high skilled --itions was frequently him frequently reported. inflation was not a problem anywhere. the next big report for the fed to consider, the jobs report. back to you. >> we will have more on the beige book coming out. scott brown, chief economist will join us. we will get his analysis and what is next for the fed as the central bank enters into a new era. today, president obama outlined his plan. the president speech and what it could mean in the coming months. >> calling it the defining challenge of our time, president obama laid out broad plans.

what was called a preview of the state of the union address, he called for a race to minimum wage and new investments in research and education. all part of an effort to close a gap that iss -- a increasingly large. >> they pose a fundamental threat to the american dream, our way of life, and what we stand for around the globe. is an issue they have hit on before. economic equality was the core of their attacks against mitt romney. today, president obama made clear it would be at the core of his agenda for the remainder of his time in office. whoited hope francis questioned a society driven by money and called on people to care more about the death of a homeless person than if the stock market went down.

all of this has been laid out before. major roadblocks on capitol hill. republicans are concerned and have voiced it. an increase in unemployment insurance. a spokesman for john boehner said the president during his six years in office is as much to blame for anyone during the current state of the economy. incomethan tackling inequality, he has focused on taxing some down. clearly, no easy answers when it comes to this issue. still, it is safe to say this will be a primary focus for the obama administration in the months ahead. back to you. >> united states military is facing more but it cuts. hagel announced today that 200 positions will be eliminated from the office of the secretary of defense, but he said there

will not be a large number of immediate layoffs. reductions that i have announced today will occur through a process of natural attrition in order to minimize the impact on our workforce. if the department is forced to one steep sequestration cuts the order of $500 billion, we may need to implement additional reductions. hagel adds that cuts will save about $1 billion over time. coming up, the fed says factories are giving the u.s. economy a boost but the latest beige book data is out. we will look at what else is expanding when "bottom line" on bloomberg television continues in just a moment. ♪

collects welcome back. let's show you how the equity markets finished.

stocks fell for a fourth day. the longest him in 12 weeks. investors weighed economic data for clues on the timing of central banks stimulus cuts. also watching for new developments in a possible budget deal in washington. now let's get to the numbers. the market index was down two points. at the dow jones industrial average was down 24 points. the nasdaq composite was up 4038.onally at the beige book. the central bank credits housing and technology for fueling growth through november. we are joined from his office in st. petersburg florida. welcome back to "bottom line." good to see you again. >> nice to be with you. >> any surprises in the report? >> not really.

i think we were focusing on what the key headline phrase was going to be. they had used this phrase, modesty oh moderate growth for the previous for the beige book. this is now five in a row. the messages essentially that it is more of the same. gradualoing to be a recovery. year, i think the biggest headway has been the federal government. the economy has certainly been once we gethere it beyond that, we do expect the economy to pick up some steam here. >> if the government to get out of the way, maybe this thing with take off area >> i think there has been a huge miss focus .n the budget deficit it is really a long-term problem. the key thing you want to do

right now is get the economy back on its feet and coming along. you are actually slowing that recovery down. i think it is just misguided policy. we do not expect that to last forever. we are also saying state and local government coming back a little bit more. that may offset the track we're going to get. >> you just mentioned that modesty oh moderate phrase. as you mentioned, the last four days books contain that wording. should we read anything into that? what does it say about the growth expectations going forward? >> we have seen the fed consistently lower their projections. they have been more realistic. anticipating that growth will pick up, the key issue for the fed, and particularly with a new fed chair coming in, janet yellen is going to be preoccupied in this guiding --

and deciding when to taper and how rapidly to taper. more important like, how to communicate detentions to the markets. landly, the asset purchase cannot go on forever. it has to begin to taper at some point. the fed is still going to rely on the short-term interest rate to support the recovery. the markets have not gotten the message. the markets started tightening. long-term interest rates decided to rise more. >> speaking of message, the beige book showing that consumers increase their spending in most regions of the united states. spending on black friday, that they'll. how do you reconcile this seeming disparity, especially with retailers having to offer steep discounts to get into the stores, only been to see them have second thoughts and not open up their wallets?

>> the consumer has been a real mixed bag this year. end oflook at the upper the income scale, they have money in the bank. large houses. the stock market gains in the last couple years, the improvement and home prices, that has made them feel wealthier and they have been spending a lot more. the typical worker is running as fast as they can to stay in the same spot. we had seen very little growth. you heard the president talking about it today. you heard the pope come on with a strong statement just a couple of days ago. i think this inequality story will be a major issue for the country over the next year or so. >> fast food workers in cities around the country are going on strike for increased wages. what clues does the report give about the state of the labor market then? >> hiring had increased

modestly. that is not what the fed is looking for in the job market. for the last couple of years, we have seen job destruction economy going relatively low. when you add all of those up, that trend is remarkably low. in a newissue has been hiring. we really will look to the smaller, newer firms to account for the job growth. those firms are still very much credit constrained. hiringould help the situation over the course of 2013. >> we have aut one minute left. on friday, as you know, we get the number four november. what are you expecting? if we see another strong month of hiring, might the fed be introducing -- at its next meeting? certainly some strong numbers could lead the fed to taper.

it depends on how strong. you have a lot of seasonal issues going on with the labor market because of the holiday shopping season. you normally lose 2.5 million to 3 million workers. due to that end of the holiday shopping season. the numbers can get a bit distorted. there may be some weather affects. the tapering is coming. it is really a question of when. >> scott brown joining us from his office in st. petersburg florida. it is always a pleasure to have you on the broadcast. thank you for your time tonight. >> when bottom line continues, you know that person next to on the plane that won't stop talking to you? imagine that they could talk on their cell phone for the entire flight. to agencies,at how the fcc and the faa are deciding what this could mean for the public. you will want to stay tuned for that's next. ♪

>> welcome back. this is "bottom line" on bloomberg television streaming on your tablet, phone, and bloomberg.com. maker ofina's largest phone equipment is pushing back against u.s. scrutiny of a south korean contract. roddare poised to provide band equipment for that u.s. ally. megan hughes has the details from washington. >> last month, regional news huawei wasported that work with south korea. a spokesman said, our dear is

world-proven and trusted, connecting almost one third of the world's population. the motivation of those that might report otherwise are punishing. who raised the concern? senator dianne feinstein and senator robert menendez who was on the committee of foreign relations. last week they sent a letter to chuck hagel, john kerry, and intelligence director james clapper. 's said that hauwei involvement could increase risks andthe u.s.-korea alliance that the telecom infrastructure is critical there. this also comes at the same time vice president joe biden is including stops in both asia and south korea. the white house has not responded to the letter but it could come up in meetings. as for south korea's response, it was actually a subsidiary of seoul-based lg.

says the value of the contract has not been determined and they haven't considered ending the contract because of u.s. concern. all they're getting from the company is equipment and they will have no access to network operation. the back to you. >> also tonight, vice president biden and the chinese president met in beijing as tensions over china's decision to enforce a rattled thense zone region. we have the details. >> vice president biden did not directly address china's air defense zone after his meeting but there was little else people in the region have been focused on. they are in the midst of walking a diplomatic tightrope. it is something biden made clear as he sat with xi after the

meeting. call complex relationships for sustained a high-level engagement. that is why the president of united states asked you to be here. >> u.s. officials say behind closed doors biden laid out the obama administration's objections in detail and called on him to reduce the tensions. it is acial said territorial dispute in the region. he was going to hear biden out. what he decides to do it that remains an open question. shred ofng came with a positive news. it came from the chinese government. an offer to set up communication channels between china and japan. it would be a shift for the japanese who have refused to acknowledge the air defense zone's existence. what continues to suck the oxygen out of the broader economic agenda, both he and xi expressed the view

that 2013 has been a positive year. biden, in his public remarks able toar that they are solidify the relationship and the possibilities are endless. the need for trust and the relationship is something from the foreign relations committee that was reiterated multiple times in his statement. consequentially bilateral relationships that will play a significant part in affecting the course of the 21st century. from air defense tensions to flying the friendly skies, the federal communications commission is considering new could allow you to phone a friend while up in the air. bloomberg has more on that story. week, couldas next

follow the lead and give the green light to a wider use of smartphones on flights. the proposal brought forward would allow passengers to make cell phone calls, send text messages, and use other mobile services but not during takeoff and landing. consumerwould expand access and choice for in-flight mobile broadband and modern technology can deliver mobile services in the air and the time is right to review our outdated and restrictive rules. the current dan dates back to 1991. the sec proposed modifying the and with little success. we will give it another go at their next meeting where if approved, it will be open for public comments followed by rule making. it is unclear how quickly this

will all happen. higher demand could lead a faster response. we are more attached to mobile devices now than we were a year ago -- years ago. >> is it still up the discretion of individual airlines? >> that is right. that is the big question. the debate is not about technology but politics and pushed back. delta airlines have said they are leading against this. a survey of customers found that 64% found the ability to make on board calls would have a negative impact on the flight experience. flight attendants unions have said they are opposed to the idea. hen tom wheeler said preferred not to hear his suit made on the phone but because there are no technical reasons to continue the ban, he wants to leave the decision up to the airline. >> thank you.

coming up, ironic it's ready to return to the international oil market. gets ready to return to the international oil market. in just a moment. ♪

>> welcome back to the second half-hour of "bottom line" on bloomberg television. thank you for staying with us. as we hit the bottom of the hour on this wednesday, december 4, , the slugall street start to the mug. the losing streak in two months. adp reporting u.s. businesses last month added the most jobs in the year. down a little more.

the dow jones industrial average falling as well. state kerry will present the outlines with palestinian leaders this week. the proposal will mark the first time that kerry's directly intervened in the talks since they began in late july. a wintry storm pushing through the rockies brought victory cold temperatures. it threatens crops as far south as california. the storm is blamed for at least six deaths. of the windchill was expected to drop to 30 degrees below zero in parts of montana while wind

chills of -20 were reported the nebraska panhandle. in the denver area temperatures were expected to drop below zero over the next several days. online shopping went to a record on cyber monday. many consumers snubbed physical stores and took to the web to buy holiday gifts. internet retail sales rose to almost $2 billion. at that committed the heaviest web spending day ever for the fourth straight year. almost $24 billion has been spent on the web since november 1. that is an 8.4% gain from the same time frame 2012. that is a look at the top stories this hour. join us for a special "bloomberg --

west" this friday. we will show you how you bay has evolved from an online auction house to a tech giant, surviving and thriving after the tech bubble. do not miss it. u.s. crude inventories declined for the first time in weeks. closed at $97. the spread between wti in brent was at its narrowest in nine days. opec is content with these prices and has agreed to maintain oil production at current levels. bloomberg is in the end that with highlights from opec's latest meeting in the commodity report. >> with the price of crude in north america, the bti surprise that the opec decided not to cut production today and keep things how they are.

going or word, things might be very different. demand for opec supply is set to least as a few of the producers intend to produce more oil in the coming future. perhapserestingly, iran. the biggest development at this opec meeting is iran returning as a potential big player in the oil markets. that is not to say the minister was walking around with any kind of swagger. that sanctions might be removed and iran could reenter the oil market in a big iraniansmean that the could talk to international oil companies about how they do that. in fact, they are already preparing. >> international oil companies bp, conoco phillips.

tothey also sent a signal saudi arabia today, asking it to make room for iran should iran reenter the oil market. interesting, considering they are archrivals in the gulf, in fact on opposite sides in syria. will arabia says it welcome iran returning to the market. iran says even if other countries do not cut production, they will ramp up there's two 4 million barrels a day. that is a lot more than the market is getting right now. >> still ahead, ford is giving the police cruiser a facelift. police interceptor is the fastest cop car on wheels and incorporates bulletproof armor that could withstand a hail of gunfire. now it is getting smarter.

details when "bottom line" continues in a moment. ♪

>> the police car is a key component of how law enforcement officers protect and serve. some think that those gas guzzlers of the past are in desperate need of a facelift. matt miller reports. from blues the scene brothers were ellwood tells his brother jake that a new ride was in the power plant? >> cop shocks. forward 30 years and every cop car out there is still pushing a v-8 engine until now. board puts out 66% new power than the blues mobile by bolting

on a couple of turbochargers and it is only a v6. 5.66 seconds. it is not all about speed and efficiency. remember, criminals shoot at these cars. the interceptor uses body armor -- table of stopping a full metal jacket. the company has software that uses a rearview camera that alerts the car to bad guys creeping up behind. it will automatically roll up the windows, lock the car, and sound the alarm. of course, most officers would rather not get jumped or shot at.

the tracker sticks to the car and leads police straight to the fugitive. no high-speed chase necessary. ,hile police forces upgrade outlaws on the land better think of a new way to get a leg up. >> on thursday, tune in for matt miller's toward motor president and ceo. that will be at 10:00 a.m. new york time on market makers this thursday on the on bloomberg television. staying with autos, would you believe them mexican sports car? the country is not known for supercars, but two brothers are hoping to change that. to 60 in 3.0zero seconds. it is designed to feel like a motorcycle with four wheels. betty liu got a look at what so special.hl

>> it is quite different from anything you can see out there. [indiscernible] like having the experience of a motorcycle. is almost like a mini cooper. it is lighter. it is wide. we are inside the base model. lightweight car. the car isation of quite impressive. from zero to 60 in 3.5 seconds. breaking of the car is less than 100 feet from 60 to zero.

the engine comes from the u.k. era to the bodywork comes from canada. the brakes come from the u.s.. the wheels come from italy. the tires are french. we try to work with the best in every component. government federal has funded the project from day one from the science and technology council. >> they wanted to support because part of the statement is, look at us. mexico can produce beautiful sports cars. >> may be in the beginning but now it is. we produce in low volumes. the kind of project we can now see in mexico. >> coming up, the latest housing higheris out and despite mortgage rates, home buyers are snatching up new homes. the housinging market reach new heights? we will sit down and find out

when "bottom line" on bloomberg television continues in just one moment. ♪

>> welcome back. this is "bottom line" on bloomberg television, streaming on your tablet, phone, and bloomberg.com. americans went on a home-buying binge in october. home sale rising by 25%. that is the biggest rise. still, new data from september showed the market was weaker than expected area of higher mortgage rates are to blame. the manager of digital risk. mortgages in the u.s.. thank you for coming on. how much weight do you give one months worth of a tech? >> it was probably two months worth of data. we had the government shutdown and then having september and

october come out, what we really andwas this huge reduction anticipation and more often normalized number in october. jump.ives you that 24% >> no concern given the government shutdown? >> because the refinance dropped off in may, we had the big numbers in october. >> i saw that, too. 60%. what happened? >> for people who could not refinance, i think interest rates ticked up a little bit. i will take a step that and see if i can get a better rate. much more than anticipated. inprices for new homes fell october. the pricesown 4.5%. have declined slightly over the past 12 months. is this an oversupply issue? of anerever little bit undersupply issue. you look at 10 million households.

it will have equity. then you have tightening inventories right now. we have a situation right now where we are looking for new supply to come to the marketplace. >> mortgage rates. latest average on a fixed loan, 4.29%. still at historic lows. does nearly a percentage point higher. what is the state of mortgage lending right now? are buyers stilts get it even with rates this low? even with rates this low? >> 30 years, we've never seen anything like this. buyers, if you're going to buy a house, and get it. get into the house and the mortgage market. the big thing coming up is all going to be about the cost of compliance. whether you are a small and there are a large lender. how do i comply with all frank. the ability to pay. >> speaking of which, there is a

lot of pressure to relax lending standards. that is an effort to boost loan volume. fannie and freddie are tightening their credit standards. what is the end result? that ise in a market 95% government driven. the markets will start to loosen . private capital will start to come in. the price will be higher interest rates but more credit will be available to more people. >> and use a loosen the underwriting guidelines, that has its good parts and it's bad parts, doesn't it? you don't want to go to the point where we were a few years ago, as some people said, if you could walk and chew gum at the same time you could get a mortgage even if you did not i. >> we were so far to the left and now we are so far to the right. the average score is 750 these days. people can afford to pay for the houses that they want. i think it is just coming back elizabeth smart to the left. we will be good for the housing

market. >> there are even spent include property evaluation errors and income the statements. how prevalent are these? we are seeing quite a bit right now. not cost, they are necessarily by buybacks but these defects overtime could evolve to be more serious. >> how do they differ from mortgage fraud? it is somebody was no intent to live in the house. they're basically buying and selling for profit. these defects or someone trying to do a good alone but the appraisal was wrong, the income was misstated, etc.. >> when do we get back to a healthy pace of home sales? when are we going to get back to that? >> i think this next year we will see a market of around 800 -- adding 2015 we could be

there. >> is that contingent on jobs? we get that all-important jobs number tomorrow. is that contingent on people getting back to work? >> it is. >> on friday, excuse me. >> you can either put 20% down or you can use mortgage insurance to buy that house up until the point where your loan value is less than 80%. >> the cofounder and managing partner of digital risk. pleasure to meet you. >> do what. >> coming up. need some luck for the new year? it will cost you $5.95. we will explain. ♪

>> that is a look at the futures markets. bloomberg brings you a market check after each hour of the trading day. let's get to the "bottom line" of what is happening thursday. we will get to her in just a moment. first, the capital managing partner sits down with stephanie ruhle at the investment summit for an exclusive interview on the agenda. argentina, japan, gold, and general motors. matt millerotto, will be joined for a live

interview at the unveiling of the new ford mustang. matt will also talk about his future with ford and reports that he may be on the short list of candidates to take over as the ceo of microsoft. joseph a bank reports earnings at 6:00 a.m. new york time. what is happening in washington on thursday? >> let's start with tomorrow possibly cleat jobless claims report. the labor department will release a new tally. bloomberg expects that number to be 322,000 up from -- and the prior week. also at 8:30, treasury secretary jack lew will deliver remarks about the next steps on financial reform at an event here in washington and on capitol hill, house lawmakers are set to look into patent controls. the bill is expected to pass.

on the eighth day of hanukkah, president obama will host not the one but two receptions at the white house. that does it for looking ahead. >> thank you. it is time now for "hot shots," a look at the most compelling images of the day. the official world cup ball has been revealed in rio. took 2.5 years of testing. it is a term used to refer to brazilians living abroad and is five --ng used to do described national pride. traditionals bracelets worn in brazil. want to be lucky in 2014? the u.s. treasury can lend you a hand. it is printing lucky money to

mark the chinese year of the horse. the uncirculated one dollar bills will have a serial number beginning with 8888. in chinese culture, the number eight is considered auspicious as it sounds like the word that means a wealth. the lucky dollar bill is on sale , 595 each. speaking of lucky, here is a lucky shot. the harlem growth -- harlem globe trotter broke the record for the longest basketball shot. he threw the ball across the court and sunk it in the opposite basket. ok. you cannot make that up. get the latest headlines at the top of the hour and streaming on your tablet and on bloomberg.com.

that does it for this edition. i am mark crumpton. see you tomorrow night. ♪